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It’saboutAPPUandQoE,not

ARPU

TCOBenefitsofConverged5GReadyIPTransport

EXECUTIVESUMMARYStimulatedbytheopportunityfornew5Genabledserviceofferings,manyserviceproviders around the globe have announced, if not launched, 5G services.Although5Gtechnologyprovidesaplatformtoinitiateamyriadofnewconsumerandbusiness services, itwill alsodrivenew scaling challenges as thenumberofdevices,theirbandwidthandperformancedemandsreachhigherexpectations.

Many service providers are challenged to find a way to deploy 5G with stalledgrowth,mountingcompetitionandregulatorypressures.Whilethedesiretodrivetop-line growth with new services, and reduce operating costs through theadoptionofautomation,manyserviceprovidersaresidelinedbytheirinabilitytofreeupbudgetduetotheburdenofnumerouspurpose-builtnetworks.Formanyyears,serviceprovidershavebeenrollingoutpurpose-builtstand-alonenetworksto deliver specific services (mobile, residential or enterprises). These siloednetworks require specialized skills, dedicated resources, unique operationalprocesses and tools. Delivering services across these network boundaries isextremelycumbersomeandexpensive.

To free up budget and resources to implement 5G, service providers need toconverge services onto one transport network to handle the amalgamation ofserviceofferings.Withthisconvergedstrategy,serviceproviderscansignificantlychange the economics and lower their total cost of ownership (TCO) whilebenefittingfromthelatesttechnologyadvancestoenableserviceinnovationandvelocity.

This paper presents the results of a TCO analysis comparing the economics of aconvergedIP/MPLStransportnetworkwithmoretraditionaldedicatednetworks.The resultsof theanalysisdemonstrate significant savingswithanoverall TCOsavings.of62%,capitalexpense(CAPEX)savingsof60%,andoperationsexpense(OPEX) savings of 66%. The analysis asserts the financial advantages of aconvergedfuturemodeofoperationandelaboratesonthebenefitsofthehigherprice performance of Cisco’s 5G ready routing portfolio and the benefits ofsegmentrouting,networkprogrammabilityandautomation.

KEYFINDINGS

• 5G services drive newnetwork requirementsfor high data rates, lowlatency, high reliability,high security, andnetworkslicing.

• 5G ready routers mustsupport SDN, segmentrouting, open APIs, andadvanced networkorchestration andautomation.

• Cisco’s5G ready routersprovidethefeaturesandfunctions required for5G while lowering TCOby 62%, CAPEX by 60%,andOPEXby66%.

• Cisco’s 5G ConvergedSDN Transport networkprovides significantfinancial advantages tochange the economicsand lower the TCO ofthe 5G transportnetwork.

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5GTRANSPORTNETWORKS

As service providers around the world plan, test, and/or roll out new 5G service offerings, theexpectationisthat5Gwilltransformtheworldwithinnovativeserviceofferingsrangingfromenhancedmobile broadband to critical and massively connected IoT devices. To deliver these new use cases,mobiletransportnetworksmustsupporthighercapacity, lowerlatency,enterpriseclassreliability,andend-to-endsecurity.

Acriticalpartofthe5Garchitectureistheany-to-any,highlyscalable,andflexibletransportnetworktodeliveravastanddiversesetofthese5Gmobile,businessandresidentialserviceofferings.Itiscriticalthatweacknowledgethese5Gusecasesandtheirassociateddemandsonthenetworktothoroughlyunderstand their impacton the5GTCOmodel.Serviceprovidersneed toensure that5Gservicesarebothscalableandprofitable.Toachievethisgoal, theymustminimizenetworkTCOwhilemeeting5Grequirementsforscalability,reliability,security,andlatency.Thefollowingsectionprovidesanoverviewofthese5Gusecases,associated5GmobiletechnologiesandIPtransportnetworkrequirements.

5GUseCases

There is amyriadof5Guse cases, and theexpectation is thatnewapplicationswill evolveata rapidpace as the 5G ecosystemdevelops organically. To address key 5G technical requirements, the 3GPPstandardsbodyhasdefinedthreeprimaryusecases thatdefinerequirements for thousandsofactualusecasesandapplications(Table1).

USECASE APPLICATIONS TECHNICALREQUIREMENTS

EnhancedMobileBroadband(eMBB)

HD & 3D video, AR & VR, next-generationsocialmedia

Peak data rates of 20 Gbps, userexperience data rate of 100 Mbps,areatraffic10Mbit/s/m2

Ultra-ReliableLowLatencyCommunications(URLLC)

Tactile Internet, telehealth, smartutilitycontrol

User plane latency up to 1 msec,controlplanelatencyupto10msec,highreliability

MassiveMachine-TypeCommunications(mMTC)

Massive IoT, smart city, vehicletracking&control

1Mdevicesperkm2

Table1.3GPP5GPrimaryUseCases

These5Gusecasesandrequirementswilldrivemassivenetworkscale,ultra-lowlatencyrequirementsand large increases in end-points and associated services. It is also anticipated that because of theorganicnatureofserviceevolution,networktrafficpatternswillalsobecomemorediverseanddifficulttopredict.Asnewapplicationsenterthe5Gecosystemthenetworkmustbeflexible,reliable,andabletoprovidestrictqualityofservice(Q0S)totheseapplications.

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5GTransportNetworkRequirementsandKeyTechnologies

The5Gusecasesandsupportingtechnologiesandarchitecturesaredrivingtheneedforaflexibleandrobust transport networks. Unlike previous generations of RAN transport networks where almost alltraffic flow is between cell sites and centralized DC, 5G mobile network have much higher sets ofrequirements.Theseincludes:

• Massiveincreaseinbandwidth• Ultra-lowlatencyforselectedtraffic• Multi-AccessEdgeComputeforinfrastructureandenterpriseworkloads• NetworkSlicing

End toend IP is thebestoption for5G transportnetwork. Someof the key IP technologies that arenecessaryfor5G:

SoftwareDefinedNetworking(SDN):SDNallowsseparationoftheroutingcontrolplaneanduserplane.Itprovidestheframeworkformoreadvancedroutingandtrafficengineeringtosatisfyrequirementsforboth bandwidth and latency. SDN enables advanced traffic engineering, which reduces average linkutilizationswhichinturnreducesnetworkTCO.

SegmentRouting:Asource-based routing technology thatenables IP/MPLSand IPv6networks to runmore simply and scalemore easily. Segment routing eliminates resource-heavy signaling protocols ofMPLS and moves intelligence to the source/edge of the traffic thus removing complexity from thenetwork.Thekeybenefitsare:

• Networkingprotocolstacksimplification(LDP,RSVP-TEarenolongerneeded)• Networkprogrammability• IntegrateswithSDNcontrollers• AdvancedtrafficengineeringandlowernetworkTCO• 50mseclinkandnodeprotection• Unifiedfabricacrossaccess,metro,core,anddatacenters

NetworkProgrammability:Therequirementsfor5Gtransportdrivetheneedfornetworkflexibilityandprogram control.Network elements andmanagement systemsmust have openAPIs to allow varioussystemstocontrolnetworksandtoextractdatafromthem.APIsallowforautomation,whichreduceslaborexpensesthusdecreasingnetworkOPEX.

Automation and Orchestration: Network orchestration provides a framework for easily provisioningnew services and facilitating DevOps. Network elements must support NetConf protocols and Yangmodels and use orchestration systems to automate network configuration, fault, and performancemanagement.AutomationreduceslaborexpensesthusreducingnetworkOPEX.

ConvergedNetworks:Manyserviceproviders’IPnetworkshavegrownupinsilos.Forexample,serviceproviders traditionally built separate networks for mobile, business, and residential services. This isbecausetraditionalIPnetworkshavelackedflexibility,andvariousproductsandsoftwarewererequiredby different applications and services. Additionally, itwas easier for organizations to fund, build, andmaintain their own networks. 5G networks are designed to support multiple types of customers,services,andtechnologiesonthesamenetworkinfrastructure.Therefore,asserviceprovidersmoveto

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5G they should converge their network infrastructures to obtain the full benefits of 5G.A convergednetworkreducesTCObecauseacommoninfrastructureissharedforallservices.

TCOANALYSISAn important consideration in migrating to a converged 5G transport network is the total cost ofownership (TCO). The next-generation network must not only meet the requirements previouslyspecifiedbutmustalsochangetheeconomicsso that theTCO is reducedover time.Sincebandwidthdemandis likelytogrowfasterthanrevenues,theconvergedIPtransportnetworkmustbemorecosteffective than previous networks. The following sections describetheTCOmodelandassumptionsandpresenttheresults.

TCOModelDefinitionandAssumptions

OurTCOanalysiscomparesthepresentmodeofoperation(PMO)with the future mode of operation (FMO) for a typical mobilemarket segmentdepicted inFigures1and2, respectively. Inbothscenarios, we analyzed networks carrying concurrent mobile,residential, and business service traffic with projected growth inbandwidthdemandoverfiveyears.InthePMOmodelwemakethefollowingassumptions:

• Dedicated IP transport networks are used for mobile,residential,andbusinessservices.

• Acommoncorenetworkisusedforallservices.• CurrentCiscoroutersareusedintheTCOmodel.• MPLSisimplemented.• Segmentroutingisnotimplemented.• Ciscoadvancedautomationandorchestrationfunctionalityisnotimplemented.

FortheFMOmodelthefollowingassumptionsareused:• ConvergedIPtransportnetworkisusedforallservicesatthepreaggation,aggregation,andcore

layersofthenetwork.• Cisco’s5Greadyroutersaredeployed.• SegmentroutingisimplementedusingMPLSorIPv6.• CiscoNSOisusedforintent-drivenconfigurationandorchestration.• CiscoCrossworkprovidesfullnetworkautomationandintelligence.

ForboththePMOandFMOthefollowingnetworkandtrafficassumptionsareusedinourmodel:

Theconverged5Gtransportnetworkmustnotonlymeettherequirementspreviouslyspecified,butitmustalsoreducethenetworktotalcostofownership.

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10GEAccessRing

MobilePreAggRouters

MobileAggregationRouters

ResidentialAggregationRouters

BusinessAggregationRouters

ResidentialPreAggRouters

BusinessPreAggRouters

CommonCoreRouters

Figure1. PresentModeofOperation

ConvergedPreAggRouters

ConvergedPreAggRouters

ConvergedAggregationRouters

ConvergedCoreRouters

Figure2. FutureModeofOperation

MobileServiceAssumptionsTosupport5Gserviceswithimprovedcoverageandincreasedbandwidth,transportnetworkswillneedto be densified. By using bothmacro and small cells, operators can address the need for increasedcoverage and higher capacity more economically. These trends are characterized by the followingtechnicalassumptionsusedinourTCOmodels:

• Numberofcellsitesservedbytheaggregationnetworkemulatedinthetwomodelsgrowsfrom2,000to3,500overfiveyears.

• Averagetrafficismodeledat800Mbpspercellsitewith40%annualgrowthrateoverfiveyears.

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• Aratiooffivecellsitesperaccessring,10accessringsperpairofpreaggregationnodes,and28aggregationroutersaremodeledtoemulatethemarketsegmentevaluated.

ResidentialServiceAssumptionsWeassumethatresidentialbroadbandisprovidedwithDSLorcable.Residentialtrafficishighlyburstytypically because of Internet activity, streaming, and long periods of downtime. Consequently, thetechnicalassumptionsusedinourTCOmodelare:

• 10,000subscribersareassumedperpre-aggregationnode.• Adensityof288subscribersperDSLAM/CMTSismodeledintheanalysis.• TheDSLAM/CMTSdirectlyconnectstothepre-aggregationroutersinthemodel.

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BusinessServiceAssumptionsThe TCOmodel also assumes that business services were provided over Carrier Ethernet emanatingfrom thepre-aggregation router. It isprojected thatbusiness service traffic is growingata rapid ratewiththefollowingassumptions:

• 1000businessCPEareassumedperpre-aggregationrouter,• Averagetrafficof2MbpsperCPEwitha42%annualgrowthrateoverfiveyearsemulated.

TCORESULTS

A comparison of the cumulative TCO over five years is presented in Figure 3. The cumulative TCOincludes both CAPEX andOPEX. CAPEX includes the cost of purchasing routers, automation software,andanyotherone-time investmentsmade inthenetwork infrastructure.OPEX istheon-goingcostofoperatingthenetwork.Figure3showsthattheTCOofa5Greadynetwork(FMO)issignificantlylowerthanthePMOnetwork.

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Figure3. PMOversusFMOCumulativeTCOComparison

Theoverallsavingsofthe5GreadyFMOnetworkare:• 60%CAPEXsavings• 66%OPEXsavings• 62%TCOsavings(CAPEXandOPEX)

ThedriversoftheCAPEXandOPEXsavingsareexplainedinthefollowingsections.

CAPEXSavingsAnalysis

TheprocurementcostsforroutersconstitutenetworkCAPEX.5Gtrafficisgrowingatarapidrateandinorder tomaintainor improveprofitmargins it is essential to continually reduce the costperbitof IPtransport. Cisco 5G ready routers are highly scalable and have a significantly lower cost per bit thanearlier generation routers. The converged network architecture depicted in Figure 2 allows the IPtransport network to be shared among multiple services, which increases resource utilization andtherefore reduces cost. Additionally, segment routing provides optimized traffic engineering and load

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balancing thatallow the transportnetwork to runmore simplyand scalemoreeasily than traditionalhop-by-hoproutingprotocols.Segment routingeliminates resource-heavysignalingprotocolsofMPLSandmovesintelligencetothesource/edgeofthetrafficthusremovingcomplexityfromthenetwork..TheCAPEXcomparisonofthePMOandtheFMO5GreadynetworkaredepictedinFigure4.

Insummary,theprimarysourcesoftheCAPEXsavingsare:• Convergednetworkreducesthenumberofroutersandimprovesrouterutilization.• Cisco’s5Greadyroutershavebetterpriceperformance.• Segmentroutingallowsthetransportnetworktorunmoresimplyandscalemoreeasily.

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Figure4. PMOversusCumulativeCAPEXComparison

OPEXSavingsAnalysis

Operations expenses are the on-going costs associated with running the network. The categories ofOPEXanalyzed in thismodelaredefined inTable2.Ouranalysis showssignificant66%OPEXsavings.ThecumulativeOPEXcomparisonof thePMOandFMOarepresented in Figure5. It shouldbenotedthatastimegoesbythecumulativeOPEXsavingsincrease.SomeoftheOPEXsavingsaredirectlyduetoconsolidating the three separate networks (mobile, residential, and business) into a converged 5G IPtransport network. There are also reduced labor costs that are a result of networkorchestration andautomation provided by the Cisco NSO and Crosswork. Power consumption in the FMO network islower, resulting in lower environmental expenses. A significant component of OPEX is the technicalsupportexpensesthataretiedtonetworkCAPEX.Technicalsupportisusuallypricedasapercentageofthecostofrouterhardwareandsoftware.ThekeydriversofOPEXsavingsare:

• Convergednetworksresultinconsolidationandreductionofstaffingrequirements.• Convergedtransportnetworkshavefewerrouterstomanage.• 5Greadyroutersaremorepowerefficient(64%).• Segmentroutingsimplifiesnetworkengineering,configurationandfault-managementtasksby

reducingnumberofprotocols.• Networkprogrammabilityandenhancedautomationreducecostofnetworkinstallation(77%),

timetoperformmove,addandchangesby87%,andserviceassuranceMTTRby71%.

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AdetailedOPEXbreakdownisprovidedinFigure6.

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Figure5. PMOversusFMOCumulativeOPEXComparison

0 10 20 30 40 50 60 70 80

TechnicalSupportServices(TSS)

Security

Test&Certification

Softwareupgrades

Networkengineering&capacityplanning

Moves,Adds,ChangesforAccess/PreAggRouter

NetworkInstallationforAccess/PreAggRouter

ServiceAssuranceforAccess/PreAggRouter

Moves,Adds,ChangesforAgg/CoreRouter

NetworkInstallationforAgg/CoreRouter

ServiceAssuranceforAgg/CoreRouter

TotalPower(IT,Cooling,Aux)Expense

Millions

5YearCumulativeOPEXBreakdown

FMO PMO

Figure6. OPEXBreakdown

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OPEXCATEGORY DEFINITION SAVINGSTechnicalSupportServices

Thesearesupportexpensesforhardwareandsoftwareprovidedbythevendor 65%

Security Securitymanagementmustbedoneforboththeroutingandopticalnetworklayers;involvessecuritymonitoringandpatching 50%

Test&Certification Beforeanynewhardwareorsoftwarereleasesaredeployedinproduction,theymustgothroughaserviceprovider’stestandcertificationprocess 50%

SoftwareUpgrades Networksoftwareupgradesrequireplanning,monitoring,execution,andpossiblyrollbacks;laborexpensesassociatedwithsoftwareupgrades 50%

NetworkEngineering&CapacityPlanning

Networkengineeringgroupsareresponsiblefornetworkarchitecture,detaileddesign,resiliencyanalysis,andcapacityplanning 50%

Moves,Adds,Changes Networkoperationrequiresconstantchangesinconfiguration,tuning,andmanagement 87%

NetworkInstallation One-timeinstallationexpensesfornetworkequipmentinstallation 75%ServiceAssuranceLabor Faultmanagement,troubleshooting,andrepairactivities 71%TotalPower(IT,Cooling,Aux)CostperKwatt/Hour

Powerexpensesforpoweringandcoolingequipment

64%Table2. OPEXDefinitions

ServiceVelocityConsiderations

5Gnetworksallowserviceproviderstooffermanynewservicesthatwillprovidenewrevenuestreams.Becausemobileandwirelineservicesaresaturatedinmostmarkets,theabilitytooffernewservicesiscriticalforrevenuegrowth.Examplesofnewapplicationsandservicesenabledby5Gare:

• 4K/8K&3Dmobilevideo• Virtualrealityandaugmentedreality• Self-drivingcarcommunicationsandcontrol• Vehicletrackingandcontrol• Videomonitoringandanalysis• VarietyofIoTservices• Smartcityservices

Although there are many potential 5G services, it is not yet clear which services will gain markettraction.Therefore,serviceprovidersneedtheabilitytodeployandtestservicesquicklytodeterminewhichserviceswillgettractionandultimatelygenerateprofitablerevenuegrowth.

Thenewcapabilitiesofthe5Gtransportnetworkarekeytoincreasingservicevelocityorincreasingthespeedatwhichserviceproviderscandeployandtestnewservices.Afundamentalcomponentofservicevelocity is reducing the time required for network configuration, moves, adds, and changes, anddecreasingMTTR.Someofthespecificbenefitsofthe5Gtransportnetworkare:

• Automation and orchestration facilities will reduce time to instantiate customer services by78%.

• Automationandorchestrationfacilitieswillreducetimetoperformmove,add,andchangesby80%.

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• ServiceassurancecanreducetheMTTRfaultsby55%.• SavingsindeployingservicesreduceoverallTCOandincreasetimetorevenue.

CONCLUSION5G services and use cases place a new set of requirements on networks, driving the need for higherbandwidth, lower latency,higher reliability,better security,andnetwork slicing.Todeliveron this5Gpromise whilemeeting these heightened expectations, service providersmust fundamentally changethe economics of their infrastructure. To address the demands of 5G technologies, service providersneedtoconvergeservicesontoonetransportnetwork.5Greadytransportnetworksareconvergedanddesignedtohandle theamalgamationof fixedandmobile,consumer, residentialandbusinessserviceofferings. Service providers need to migrate to the next generation mobile transport which is bestaddressedbyIP.ThelatestroutersfromCiscoprovidesignificanthardwareandsoftwareadvancementsto address the needs of 5G networks. A critical aspect of the new network are open network APIs,networkorchestration,serviceassurance,andnetworkautomation.TheresultsofourstudyshowthatCisco’s 5G transport networkmeets the demanding requirements of 5Gwhile lowering TCO by 62%,CAPEXby60%,andOPEXby66%.

PeterFetterolf(pfetterolf@acgcc.com)isCTOwithACGResearch.HisprimaryfocusisdevelopingbusinessmodelsfornextgenerationnetworkswhichincludesIPtransport,SDN,NFV,vEPC,vRAN,othermobilenetworkfunctions,andopticaltransportnetworks.HeisalsoresponsibleforsoftwaredevelopmentoftheBusinessAnalyticsEngine(BAE)softwarenetworkeconomicsimulationtool.

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